Netflix Stock Sinks After Losing Subscribers During The First Quarter

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Netflix Inc (NASDAQ:NFLX) lost 200,000 subscribers worldwide in the first quarter, the first drop in more than 10 years. The result sent its stock down by 25% on Wall Street in after-hours trading, painting a dark outlook for the streaming giant.

Q1 Disappointment

As reported by CNN Business, the stock’s dive earlier this year due to subscriber growth concerns is now followed by a sheer users loss, as shown in the company’s earnings report for the quarter.

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The streaming giant explained the decline is mainly due to the difficulty of getting new subscribers around the world, and also to the suspension of the service in Russia, which cost the company 700,000 subscribers.

The industry pioneer saw strong growth during the pandemic as the market expected a correction, but not as strong.

Netflix had planned to add 2.5 million customers for the quarter —and analysts expected even more— but instead it lost subscribers for a total of 221.64 million viewers at present. The report estimates that the company could lose another 2 million in the next quarter.

The password sharing issue has had a significant impact as the firm estimates the network "is being shared with over 100 million additional households, including over 30 million in the [United States/Canada] region."

Turning Things Around

"Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we've always tried to make sharing within a member's household easy, with features like profiles and multiple streams," the streamer said in a statement.

"While these have been very popular, they've created confusion about when and how Netflix can be shared with other households."

The firm billed $7.9 billion in the first quarter of the year, 10% more than a year ago in the same period, thanks in particular to the increase in the number of subscribers in 12 months (6.7%) and an increase in rates.

Net profit hit $1,6 billion, below the $1,7 billion during the first quarter of 2021, while the company asserted it would improve the service.

"Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix —in particular, the quality of our programming and recommendations, which is what our members value most," Netflix stated.